Comprehending the Customer Lifetime Journey
The customer lifetime journey encompasses a customer’s complete experience with your company, starting from their initial interaction with your brand to becoming loyal, long-lasting customers. This journey comprises five phases: Awareness, Consideration, Decision, Retention, and Advocacy. Grasping and refining each stage is vital for businesses to acquire and retain customers effectively, ultimately augmenting customer lifetime value (CLV).
The Awareness phase is when potential customers discover your brand and become acquainted with your products or services. The objective is to capture their attention and spark interest. Essential KPIs to monitor at this stage include:
- Impressions: The total number of times your content is shown to users, regardless of if they click on it. Utilize tools like Google Analytics to track images on your website, content, product pages, and ads.
- Reach The count of potential users who might see your content. Knowing your reach assists you in boosting brand awareness and optimizing your resources. Please measure your space with tools like Google Adwords or calculate it manually (Reach = impressions/frequency).
- SEO Ranking: Indicates how visible your content is to users searching organically for relevant terms. Enhance your website for page speed, mobile-friendliness, optimized content and keywords, domain authority, user experience (UX), and backlinks to elevate your SEO ranking.
- Bounce Rate: The count of users who exit a web page without performing any action. A high bounce rate may suggest poor website usability or low-quality content.
- Time on Page: Evaluate the duration users spend on each web page, revealing which pages are engaging and which require improvement.
- Pages per Visit: The average number of web pages users visit during their session. A higher number signifies more engaged visitors.
In the Consideration phase, potential customers weigh and scrutinize different options. Your business must provide a robust product offering, excellent content marketing, and messaging. Pertinent KPIs for this stage include:
- Clicks: Indicates visitors engaging with website elements, media content, links, and CTAs.
- Click-Through Rate (CTR): Calculates the ratio of clicks on a specific link to the number of times users were exposed to the link (CTR = (click-throughs/impressions) x 100).
- Cost-per-click (CPC): Determines the amount of money you pay for each click in pay-per-click (PPC) marketing campaigns (CPC = total cost of an ad, post, or campaign element/number of clicks it gets).
- Engagement Rate: Demonstrates how involved users are with your content, such as commenting, liking, or sharing. Measure engagement on social media by dividing total engagement by total followers multiplied by 100.
During the Decision phase, prospects are prepared to make their final purchasing decision. Crucial KPIs for this stage include:
- Conversion Rate: The percentage of users who complete a desired conversion action out of the total number of website visitors.
- Sales: The number of transactions within a specific period (Sales = Number of units sold x average selling price per unit).
- Cost per Conversion (CPC): The total cost of a website element or advertisement about the conversions it generates (Cost per conversion = Total cost of ads, content, or media/number of conversions).
The Retention phase emphasizes keeping existing customers’ content and sustaining a long-term relationship. Key KPIs to monitor and evaluate at this stage include:
- Customer Loyalty: Gauges a customer’s propensity to conduct repeat business with your company.
- Customer Satisfaction is measuring whether your product, service, and user experience fulfill user needs. Use surveys, Net Promoter Score (NPS), and Customer Satisfaction Score (CSAT) to gauge satisfaction levels.
- Customer Lifetime Value (CLV): Assesses the revenue produced throughout the lifecycle of a customer’s relationship with your company (CLV = average purchase value x average number of purchases x average customer lifespan).
- Feedback: Monitoring customer feedback is crucial for comprehending the quality of your users’ product experience. Utilize surveys, interviews, and feedback forms to gather insights into user needs and areas for improvement.
In the Advocacy phase, delighted customers become your product and brand promoters. KPIs to measure customer advocacy include:
- Referrals: The number of customers referred by existing customers. A higher referral rate indicates that users are pleased with your product or service. Calculate the referral rate by dividing the number of referred purchases by the total number.
- Testimonials and Reviews: The quantity and quality of customer testimonials and reviews serve as indicators of customer satisfaction and advocacy. Monitor review platforms like Google Reviews, Trustpilot, and Yelp to gather valuable feedback and identify trends.
- Social Media Shares: The number of times your content is shared on social media platforms indicates how much your customers endorse your brand. Track shares and mentions using social media analytics tools.
While all these phases are essential, it is important to note that many businesses make the mistake of going soft on the retention and advocacy stages and focusing so much on marketing and acquiring new customers that they fail to devote the same amount of attention to retaining customers and building a group of raving loyal fans. It is essential and lucrative.
According to a study by Harvard Business Review, the average increase in lifetime value for a customer who remains loyal for five years is 250%. This means that a customer who spends $100 with your company in their first year will likely spend $350 in their fifth year.
The same study found that acquiring a new customer costs five times more than retaining an existing one. If you spend $100 to acquire a new customer, you would need to spend $500 to retain that customer for five years.
These statistics show that it is important to retain existing customers rather than acquire new ones. By providing excellent customer service and creating a loyalty program, you can increase the lifetime value of your customers and reduce the cost of acquiring new ones.
Here are some tips for retaining existing customers:
- Provide excellent customer service. This means being responsive to customer inquiries, resolving issues quickly, and going the extra mile to ensure customers are happy.
- Create a loyalty program. A loyalty program can reward customers for their continued business, such as discounts, free products, or early access to new products.
- Offer personalized recommendations. Based on a customer’s past purchases, you can recommend products they might be interested in.
- Stay in touch with customers. Send them regular emails or newsletters with information about new products or special offers.
- Make it easy for customers to do business with you. Offer multiple payment options, make returns easy, and provide clear shipping information.
- Build trust with customers. Be honest and transparent with your customers, and always keep your promises.
By following these tips, you can increase the lifetime value of your customers and reduce the cost of acquiring new ones.
Implementing and Optimizing KPIs
After identifying the critical KPIs for each stage of the customer journey, it’s essential to implement strategies to optimize these metrics.
- Set SMART Goals: Establish specific, measurable, achievable, relevant, and time-bound (SMART) goals for each KPI to ensure you have clear targets and can measure progress effectively.
- Monitor Performance: Regularly track the performance of your KPIs using analytics tools, dashboards, or reporting software. This will help you identify trends and make data-driven decisions.
- Test and Iterate: Continuously test various strategies, messaging, and content to identify what works best for each KPI. Use A/B testing, multivariate testing, or other experimentation techniques to optimize your efforts.
- Involve Your Team: Engage your team members in setting, tracking, and optimizing KPIs. Encourage cross-functional collaboration and ensure that everyone understands the importance of KPIs in driving customer lifetime value.
- Learn from Competitors: Analyze the strategies and tactics employed by successful competitors in your industry to gain insights into best practices and identify areas for improvement.
Putting It All Together
By comprehending and optimizing the customer journey, businesses can maximize customer lifetime value and drive sustainable growth. By establishing and evaluating KPIs for each stage of the journey, you can make data-informed decisions that enhance the customer experience, boost conversions, and strengthen customer loyalty.
By focusing on key metrics at each stage, from awareness to advocacy, you can ensure that your strategies are effective and consistently working towards increasing customer lifetime value. Continual optimization, learning from competitors, and involving your team will strengthen your approach and set your business up for long-term success. Do you want a professional team to ensure you hit these goals? Click here to schedule a FREE consultation with our team to get started!